To say that Twitter Inc (NYSE:TWTR) hasn’t been doing well on the ratings front after the social media company’s first ever analyst day would be an understatement. Hence, watching Bob Peck, who is an analyst at SunTrust, come out on CNBC and give Twitter an A minus rating was nothing short of a miracle. He explained how he arrived at this conclusion.
“We looked at ten different components that were pointed out in the preview note, went through them step by step, what they addressed and graded them, actually each one, sum them all up, you get to about A minus. So, for the overall analyst day, I really like the fact that they exposed the investors to the deep bench of management talent. They gave them a granularity around new products […],” said Peck.
To put simply the words junk and Twitter Inc (NYSE:TWTR) were inscribed in very close proximity to each other on many of the top finance blogs after S&P gave Twitter a BB- rating following the analyst meeting of the company with the most popular micro blogging platform.
There are a plethora of objectionable issues surrounding Twitter Inc (NYSE:TWTR), ranging from management upheavals to the simple weight of the bottom line which seems to be flying in the wrong direction i.e. negative. The losses for the third quarter this year increased substantially from those of last year’s on account of marketing, and research and development. Twitter Inc (NYSE:TWTR)’s ship needs some serious steering in the right direction.
However, Mr. Peck seems to have a grading system that might be largely built on speculation, or in other words Dick Costolo, Twitter Inc (NYSE:TWTR)’s CEO knows how to enchant this analyst’s ears. A large part of his analysis was based on the products that are still not out yet, but he bought Costolo’s growth story.
If these products and a better monetization rate work out for Twitter Inc (NYSE:TWTR), it would be great, but a more likely scenario is that even if this does happen eventually, it will take some time given the relatively low monthly active users for Twitter as compared to social media platforms like Facebook. Hence S&P’s rating is more realistic and should therefore have greater weight.
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